The upbeat macroeconomic data releases from the US seem to be providing a boost to the greenback. August’s ISM manufacturing index has risen more than expected to stand at 56.0 well above the 50 break-even level which determines expansion/contraction in the sector. The consensus was looking for 54.8 versus July’s reading of 54.2.

In its closely-watched report, the Institute for Supply Management (ISM) revealed that the economic activity in the US manufacturing sector in August expanded at its strongest pace since January 2019. As for the components, production rose to 63.3 from 62.1 while the new orders component has surged to its highest level since 2004. This suggests good durability for the recovery process through the rest of the year. Employment remains in contraction territory though at 46.4 versus 44.3.

Tensions between India and China have flared with the nuclear-armed countries accusing each other of trying to seize territory across their disputed Himalayan border.

India’s Foreign Minister Subrahmanyam Jaishankar has said the latest border standoff is:

“The most serious situation after 1962. In fact, after 45 years, we have had military casualties on this border. The quantum of forces currently deployed by both sides at the LAC is also unprecedented,” Jaishankar told in an interview last week.

Traders might also have cheered hopes of the corona virus (COVID-19) vaccine as front-runner pharmaceutical companies, like AstraZeneca, start their final trials.

Analysts at JP Morgan say investors should prepare for rising odds of President Trump’s victory in the November elections. Betting odds, which earlier had Trump well behind challenger Joe Biden, are now nearly even, according to a report. Certainly, a lot can happen in the next 60 days to change the odds, but it is believed that momentum in favor of Trump will continue, while most investors are still positioned for a Biden win. Implications could be significant for the performance of factors, sectors, COVID-19 winners/losers, as well as ESG. Important drivers of the election in the coming weeks include developments on the Covid-19 pandemic, which looks like it might subside as the vote nears.

USD/CAD 4 Hour Chart:

Support: 1.3009 (S1), 1.2955 (S2), 1.2916 (S3).

Resistance: 1.3101 (R1), 1.3140 (R2), 1.3194 (R3).

ISM Manufacturing PMI gave instant strength to the dollar against many counterparts. We expect a bullish trend for USD/CAD.